The Federal Government's Broadband Strategy - Innovation policy, information society, telecommunications
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Innovation policy, information society, telecommunications The Federal Government’s Broadband Strategy www.bmwi.de
Edited by Federal Ministry of Economics and Technology (BMWi) Public Relations Production an design PRpetuum GmbH, München Print Silber Druck oHG, Niestetal Picture credits Fotolia: fox17 (title), Sean Gladwell (page 5), Mihai Simonia (page 6), czardases (page 8), diligent (page 13), hfng and TheFinalMiracle (page 16), Andreas Placzko (page 19), Tomasz Gulla (page 21), Neliana Kostadinova (page 23) Published by The Federal Ministry of Economics and Federal Ministry of Economics and Technology has been presented with the audit Technology (BMWi) berufundfamilie® award for its family-friendly Public Relations human resources policy. The certificate is issued 11019 Berlin by berufundfamilie gGmbH, an initiative of Germany “Gemeinnützige Hertie-Stiftung”, the Hertie www.bmwi.de Foundation. As at February 2009
3 Innovation policy, information society, telecommunications The Federal Government’s Broadband Strategy
Content
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
I. Broadband networks – essential for economic growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
2. Laying the foundations for success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
3. Federal Government sets ambitious targets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
4. Four-pillar strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
4.1 Capitalising on synergies from infrastructure projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
4.2 Supportive frequency policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
4.3 Financial aid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
4.4 Regulation geared to growth and innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
5. Information and transparency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
6. Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Introduction 5 Joining forces for Germany’s future: The route to high-speed Internet access in every home Working together with the federal states (Länder), local authorities and industry, the Federal govern- ment intends to give a massive boost to the develop- ment of the broadband network in Germany. This will be achieved by capitalising on synergies in the construction of infrastructure, using the ”digital dividend“, formulating regulation that fosters invest- ment and growth, and through financial support. 3 The aim is to have nationwide capable broad- band access by no later than the end of 2010. 3 A total of 75 percent of households should have high speed broadband access with transmission rates of at least 50 MB/sec by 2014. The government’s goal is to deliver nationwide access with this high-speed broadband as soon as possible.
6
1
Broadband networks –
essential for economic growth
High-speed broadband networks that enable the
rapid exchange of information and knowledge are
crucial for economic growth. Nowadays, these net-
works are as important for our economic and social
development as road and rail networks, rivers and
canals, or gas, water and electricity distribution
networks. Access to a high-speed broadband infra-
structure provides a basis for innovative broadband
services offering high economic returns, e. g. in the
eWork, eGovernment, eHealth and eLearning sectors.
Broadband connections vastly accelerate knowledge
transfer, while opening up an ever broader and richer
range of audiovisual media content and infotain-
ment services.
Rural areas stand to gain especially from broad-
band and the opportunities it offers. Since broadband
access is an important factor for companies and
families in deciding where to locate, it is critical for
safeguarding jobs and making rural areas more
attractive and financially viable. However, numerous
”white spot“ areas without broadband still exist,
many in parts of eastern Germany.
Cable and telecommunication companies are
investing heavily to expand their broadband net-
works (up to 50 billion euros in the next few years,
according to estimates). If we are to have access to
higher-performance broadband connections that will
act as a central nerve pathway within the German
economy, now is the time to create the right general
framework. Such measures will encourage the
efficient development of broadband networks and
facilitate the rollout of broadband access to every
home in the country.
7
2
Laying the foundations for success
Germany currently has good broadband penetration Germany. The faster the overall market development
that compares well against international levels. Over and the more attractive the options on offer to custo-
98 per cent of all German households have broad- mers, the more pressing the need to fill the broad-
band with transmission rates of at least 384 kbit/s. band gaps outside metropolitan areas.
Based on the currently accepted broadband definition
of at least 1 megabit per second (Mbit/s), penetration By the end of 2008, nearly 60 per cent of house-
amounts to approx. 92 per cent. Well over 70 per cent holds were using broadband services. Germany is
of households have access to transmission rates of at therefore a global leader in terms of broadband use
least 2 Mbit/s, while some 20 per cent can avail of when compared to other major economies. Generally
high-speed Internet access through VDSL connections speaking, businesses and private households here can
with up to 50 Mbit/s. These values are well ahead of choose between several mobile and fixed-line broad-
comparative European figures. band services and a range of different price packages.
Some 21 million of the 23 million broadband con-
In the period between 30 September 2006 and nections in service today are DSL lines operating
31 December 20071 alone, the number of available through the standard telephone network. Of that
connections with at least 384 kbit/s rose by approxi- number, 10.6 million connections are supplied by
mately 400,000. Reports from local authorities and Deutsche Telekom and the other 10.4 million by com-
federal states (Länder) indicate that this growth has petitors. At the end of 2008, roughly two million
continued. households were accessing alternative broadband.
An estimated 1.8 million households were using a TV
”White spots“ in Germany are shrinking rapidly, cable connection for broadband Internet access.
partly due to ongoing investment by the network Other forms of access were supplied via technologies
operators. The reduction has also largely been achieved such as satellite, fibre optics, WLAN or powerline
thanks to the host of action programmes offered by broadband. The exceptionally high growth of broad-
the Länder, local authority broadband initiatives in band use via cable connections is an encouraging
the areas affected, nationwide activities of associations development. In many areas, this means that the
– such as the German Association of Internet Enter- German TV cable network can offer a genuinely com-
prises (eco), Association of the Providers of Tele- petitive alternative to DSL networks. The minimum
communications and Value-Added Services (VATM), broadband requirement can also be catered for with
Association of Towns and Municipalities (DStGB) – satellite networks available nationwide. Approxi-
and various measures implemented by the Federal mately 30,000 customers have currently opted for
government. this solution. Once satellite operators implement
their development plans, this sector will offer further
With its broadband portal (www.zukunft- potential for growth (see Appendix 1).
breitband.de) and Broadband Atlas, the Federal
Ministry of Economics has helped plug information
gaps and provided advice on broadband alternatives
and recommended action. By doing so, it has raised
broadband awareness among communities who have
had few or no services, while highlighting the range
of local alternatives available.
However, the citizens and industry are demand-
ing ever higher standards: services that would only
recently have been considered adequate no longer
make the grade. This particular trend reflects the
number of solutions now available – essentially it is
the result of extremely positive broadband growth in
1 Data on broadband penetration for 2008 is being compiled; it will
be available in April 2009.
8
3
Federal Government sets ambitious targets
Overall broadband development in Germany has These targets have been defined following
been positive to date. However, the process must be intensive discussions with the telecommunications
expedited for the following reasons: sector and the Länder. The Federal Government is
3 Many households are still unable to avail of fully aware that the targets are ambitious. However,
broadband Internet services and it also believes the targets are realistic, provided that
3 Investment decisions that are vital for the the measures proposed by all stakeholders are im-
country’s economy are now underway, determining plemented in line with these targets.
the expansion of higher-speed networks with trans-
mission rates upwards of 50 MBit/s. Clearly these targets can only be achieved by
applying a combination of technologies within a
The Federal Government wishes to provide further competitive environment. This applies both to the
impetus to broadband development. It has thus elimination of ”white spots“ and the development of
defined the following ambitious targets: high-speed networks.
1. Gaps in broadband penetration are to be
eliminated and capable broadband access Given their different features, the various tech-
made available nationwide by the end of 2010. nologies all help to achieve the targets in different
2. A total of 75 percent of households are to have ways:
Internet access with transmission rates of at
least 50 MB/sec by 2014. This level of high- 3 DSL, cable networks, radio/satellite connections
speed broadband access is to be rolled out and some powerline networks enable immediate pro-
nationwide as quickly as possible. vision of blanket coverage with capable broadband
connections. Such connections are currently defined
as having transmission rates of at least 1 MBit/s.
9
3 Cable networks, VDSL, fibre optic networks and, As business locations compete internationally,
looking ahead, emerging mobile technologies such a country can gain a particular economic advan-
as LTE (Long-Term-Evolution), all provide a basis for tage with new infrastructural technologies that
high-speed Internet connections (upwards of 50 are developed more rapidly and consistently than
MBit/s). elsewhere. Locations that either fail, or are slow,
to implement these technologies will fall behind.
Similar ambitions pursued by other
Quick decisive action is thus required: we need to
economies
offer the right incentives now to encourage invest-
ment in broadband infrastructures that will deliver
Other economies also plan initially to make broad-
high rewards for the economy as a whole.
band networks widely available, also in rural areas,
and then to upgrade these to high-speed networks.
In France, it is planned that by early 2010, every
citizen will have access to broadband speeds of at
least 512 kbit/s at a maximum cost of 35 euros a
month (including the cost of broadband installation).
The planned measures to achieve this objective in-
clude: creation of a Broadband Atlas, establishment
of broadband centres of excellence, examination of
public investment in local authority broadband
networks and the use of frequencies yielded by the
digital dividend (790 to 862 MHz) for broadband
services.
In Japan, it is planned that all households will
have broadband Internet access by the end of March
2011, some 90 per cent of which will be through high-
speed Internet connections. Finland has similar
targets.
The USA is also planning to increase its commit-
ment on broadband development. President Barack
Obama has announced initiatives designed to extend
nationwide broadband coverage and quickly build a
next-generation broadband network. The appropriate
legislative procedure is already in preparation.
10
4
Four-pillar strategy
To achieve the ambitious short-term and long-term 4.1 Capitalising on synergies from infra-
goals, the Federal Government is proposing an incen- structure projects
tive-oriented approach that will
3 capitalise on synergies in the construction of Billions worth of investment will be required to
infrastructure eliminate white spots in rural areas and in particular
3 guarantee supportive frequency policies to develop high-speed networks for the future. Up to
3 commit to growth and innovation-geared 70 per cent of the costs of developing broadband
regulation infrastructure in the fixed-line network are excavation
3 provide appropriate financial support costs. These costs may be reduced significantly if the
various infrastructure providers become more open
Measures to achieve the short-term target of to collaboration and allowing third-party access to
achieving blanket coverage with capable broadband their own systems. This openness would create many
access will focus mainly on sustaining and expanding win-win situations for businesses, while reducing
financial support for local authorities and using costs for the economy as a whole. If there is broad
instruments to improve financing options available support for the measures, thus reducing the infra-
to companies. In addition, there will be more structure costs for expanding broadband infra-
planning certainty with regard to regulation, while structure within the fixed-line network by just ten per
the digital dividend and the various Länder initiatives cent, we can achieve a saving of approximately three
will also apply. billion euros in the next few years.
The long-term goal of developing high-speed 3 How can we use existing public and private
networks nationwide will be achieved by applying in systems within the telecommunications sector
addition more incentivised elements within the and other infrastructure sectors to close
European regulatory framework. Apart from offering broadband gaps and rapidly develop high-
financial support, the package of measures will also speed networks in Germany? And to what
provide stimulus to use synergies from infrastructure extent?
projects.
The more efficiently existing infrastructure is pooled,
Major efficiencies are forecast as a result of the the faster high-speed networks can be developed and
concerted support provided to infrastructure projects remote areas connected to broadband Internet.
and coordination of all stakeholders. The process will Within the public sector, this infrastructure is the
generate further investment. Ideally, it will be able to preserve of Federal and state authorities and the local
avoid duplicated and bad investments, increase authorities. Electricity and energy suppliers and
market transparency and promote the collaborative telecommunication companies also have many passive
use of existing infrastructure. Successfully developing (e. g. conduits, radio masts) and active infrastructure
and expanding broadband infrastructure to such an resources (fibre optic cables) that can be shared
efficient degree will greatly enhance the overall eco- voluntarily while networks are expanded.
nomic benefits of the Internet.
The Federal Government has proposed a total of
15 measures, which it plans to implement within the
next three months.11
We can expedite the rollout of broadband if local Federal Government will establish a platform provid-
authorities maintain an open attitude to possible ing information on existing infrastructure available
models of cooperation. For example, they could allow for shared use and relevant construction measures.
third parties access to local authority sewers to allow Similar initiatives are underway in the US, for exam-
relatively inexpensive installation of fibre optic ple, where considerable resources are to be pumped
cables. Alternatively, they could provide locations for into a ”Broadband Inventory Map“.
radio installations for the purpose of building broad-
band networks. Measure 2: Compile an infrastructure atlas
3 The German Federal Network Agency will start
Furthermore, many backbone networks (infor- work soon on an infrastructure atlas, in association
mation highways) operated by large service suppliers with the Federal Ministry of Economics and
already pass through areas that have little or no Technology. Where possible, the agency will
broadband. In effect, this means that simple ”feeder include the conceptual groundwork already
lines“ can often be used to provide connections completed by industry and broadband initiatives
rapidly in white spots. from the Länder. It is hoped that the first edition
will be available by Autumn 2009.
In Germany, there are also well over 70,000 wire- 3 The Federal Network Agency, as a highly trust-
less sites run by different operators. Many of these worthy top-level Federal Authority, will be
wireless sites offer potential for shared use by third assigned the task, while maintaining and guaran-
parties (in return for charges) to improve broadband teeing maximum confidentiality, of ensuring
coverage. that only infrastructure components that are
actually suitable for pooling are included in the
Measure 1: Optimise shared use of existing atlas. To achieve the required confidentiality, it
infrastructure and facilities will be necessary to differentiate between infor-
3 The Federal authorities will do its utmost to mation that is either publicly available or only to
support the development of broadband in Ger- selected users and information that should only
many, provided that this does not affect the be provided by the infrastructure providers
actual remit of the authorities and that safety themselves.
considerations are appropriately covered. This
consideration particularly applies to partial 3 How can we fill knowledge gaps about build-
pooling of existing infrastructure – for example, ing new infrastructure, reduce development
as present in the business areas of the Federal costs and enhance cooperation regarding the
Ministry of Transport, Building and Urban Affairs installation of new infrastructure projects?
(BMVBS), the Federal Ministry of Defence (BMVg)
and Federal Ministry of the Interior (BMI), on con- To achieve significant reductions in the construction
dition that fibre optic cables or transmission costs for broadband connectivity, telecommunication
facilities are not involved. companies must be given the opportunity to include
3 The Federal Government calls on Länder and their new infrastructure projects as part of road
local authorities to ensure their own authorities construction projects already planned. To that end,
are willing to cooperate in terms of using existing the companies must be given adequate notice of
facilities and infrastructure. scheduled relevant road construction projects.
It is also essential that companies maintain a cross-
network data basis so they can optimise their own
processes and incorporate useable infrastructure in
their planning. In addition to existing information
policy measures such as the Federal Ministry of
Economics and Technology’s Broadband Atlas, the12 Four-pillar strategy
Measure 3: Compile a database of con- Measure 4: Needs-based collaboration on
struction sites installing ducting and joint creation of infra-
3 In conjunction with the top local authority structure
associations (German County Association, 3 Collaborating on installing empty conduits
German Association of Cities and German and providing access to cable ducting etc. during
Association of Towns and Municipalities) and the the course of construction work will encourage
Länder, the Federal Government will discuss the the development of broadband infrastructure.
next steps in setting up a central database for all Greater financial support will be made available
relevant road construction projects. The database to local authorities for this purpose in future (see
is to be integrated with the infrastructure atlas at measure 8).
a later stage. 3 All possible efforts should be made to intensify
3 The Federal Ministry of Transport, Building and and promote any collaboration in creating infra-
Urban Affairs regularly provides up-to-date infor- structures (as carried out by the WSV). These
mation on roadworks sites on the country’s auto- efforts will generate synergies for all parties
bahns for the infrastructure atlas. This information involved.
is based on data obtained from the Länder regard-
ing construction work scheduled to last eight days 3 What conditions must be in place to encourage
or longer. In general, the information is updated individuals to participate in needs-based
for each state every three months. broadband rollout in every home?
In the event of doubt, information policy measures If we are to achieve long-term growth of efficient
alone will not suffice to drive rapid broadband infrastructure, broadband measures must not stop at
development. If there is lack of cooperation among the front porch. Setting up broadband connections in
market players, selective intervention by the govern- apartments and houses at a early stage is an efficient
ment will be necessary. For example, if installing way of establishing the requirements for emerging
conduits or creating suitable access points (ducting eWork or eHealth applications. It also enhances
etc.) during the construction work would greatly property values and gives people an opportunity to
facilitate the connection of broadband for individual be autonomous and work for longer in a familiar
local authorities or communities at a later stage, such environment. The Federal Government is therefore
measures should be carried out, even if no service taking action to equip houses and apartments for the
supplier will shoulder this cost at the time of the con- future.
struction work. Local authorities must have the
option of raising the costs of such measures through Tax deductions may be claimed for invoices from
suitable support programmes. tradespeople for laying cable connections to homes
(on private property), under the terms of § 35a of the
Another means of expediting progress would be German Income Tax Act (EStg). The scope of these
the joint installation of cable systems by providers of provisions must be extended – with fewer references
public telecommunications networks and public to specific technology – to further the development of
authorities. In the past, telecommunication compa- new infrastructure.
nies and the Waterways and Shipping Administration
of the Federal Government (WSV) have successfully
cooperated on some national waterways. All parties
involved benefited from this cooperation – resulting
in fewer planning requirements and lower costs. The
costs were borne proportionately by the service
suppliers and the WSV.13
Measure 5: Improve broadband uptake in the 4.2 Supportive frequency policies
home
The scope of the described provision in § 35a of The Federal Government's broadband strategy
the German Income Tax Act (EStG) will be rapidly objectives can only be achieved if high-performance
extended to all forms of broadband diffusion in mobile technologies are also deployed in addition to
buildings. In future, tax concessions will be appli- modern wireline networks, and if efficient use is
cable to any installations connecting broadband made of the frequency spectrum. Mobile broadband
to buildings and distributing the broadband con- services already play an extremely important role,
nections within the house or apartment units. both in terms of closing broadband gaps remaining
outside the wireline supply and as an addition to
fixed-line connections.
3 How can frequency policies help improve
broadband access generally among the popu-
lation in the medium and long term?
Our frequency policies aim to make optimum use of
radio frequencies. These are a limited resource. The
Federal Government supports the approach taken by
the Federal Network Agency, which seeks to involve
all affected sectors and the technical community in
maximising the flexibility of frequency use and re-
moving its dependence on particular technologies.
For example, the agency is currently collecting views
on the future possible use and distribution of the
existing GSM spectrum to cater for next-generation
mobile technologies. Today’s broadband mobile net-
works mainly service densely populated areas. This
coverage will be improved. In future, it will be possible
to apply the frequency bands of 900 MHz used to date
for the GSM networks for all types of wireless network
access – irrespective of particular technology require-
ments.14 Four-pillar strategy
Preparations on allocating additional frequency 3 How can mobile technologies improve broad-
resources are nearly complete. The specific auction band services in rural areas in the short to
rules are being drafted and will be submitted for medium term?
comment. In 2010 an auction will be held for the larg-
est spectrum ever available. No restrictions will apply In future, parts of the frequency spectrum currently
regarding the use of particular technologies and the used for analogue radio and the military forces will
frequencies will be made available for broadband be available to improve the accessibility of mobile
applications nationwide. By taking this step, the broadband Internet connections in rural areas. Due
Federal Network Agency is consistently pursuing its to its physical wave propagation capabilities, this
objective of supplying frequencies that are as tech- spectrum is particularly suited for supplying large
nology-neutral and service-neutral as possible for areas with broadband using a small number of trans-
wireless access. mitter masts. It also offers good building penetration.
The digital dividend generated by digitalising terres-
However, most of this spectrum is found within trial radio will mean, for example, that basic provision
the frequency range above 1,000 Megahertz (1.8 GHz, of broadband services can be rolled out quickly and
2 GHz, 2.6 GHz). Developing mobile networks within economically to sparsely populated areas. This divi-
this range would therefore be a very costly exercise – dend will also enable the expansion of sustainable
the expectation is that only a small proportion of the and efficient infrastructure. The Federal Government,
spectrum would be used to supply less densely popu- the Länder and current users (the military forces and
lated areas. users of wireless production technology such as
microphones) have backed this plan, even if some
Although mobile technologies generally offer issues remain to be clarified. Some shifts may be
less bandwidth than wireline networks, their role in required, especially in the cultural sector.
supplying long-term blanket broadband coverage
with high-speed Internet access should not be under- Within some Länder, there are plans to exploit
estimated. Currently, UMTS mobile networks already the unused resources from the digital dividend in the
offer download speeds of up to 7.2 Mbit/s, and by 2012 immediate future to improve Internet access via
up to 14.4 Mbit/s will be possible. Using WiMAX, mobile wireless solutions. The state media authorities
speeds of 3 to 6 Mbit/s (upstream and downstream) in Berlin-Brandenburg and Baden-Württemberg are
can be achieved today, while speeds of 50 to over 100 testing connections in rural regions with this in mind.
Mbit/s (up-stream and downstream) are predicted by The Federal Government is encouraging interim solu-
2012. The first commercial LTE (Long-Term-Evolution) tions, where possible. The radio sector was assured
chip set modules have been launched for mobile end that it would retain use of the frequency range up to
devices. These modules are designed for transmission 790 MHz, and that no limits would apply to further
speeds of up to 100 Mbit/s for downlink services and expansion or development of radio transmission in
up to 50 Mbit/s for uplink services. this range. Plans to provide Internet access upwards
of channel 60 will go ahead as soon as possible.15
Measure 6: Rapidly reaping the benefits of the 4.3 Financial aid
digital dividend
3 The Federal Cabinet has noted the proposal Experience has shown that in many cases, there is
(Appendix 2) for rapid use of a portion of the digi- poor immediate broadband uptake in rural areas
tal dividend. On 4 March 2009 it will adopt the without government support. The government must
Frequency Band Allocation Plan Ordinance therefore provide incentives in these areas through
(Frequenzbereichszuweisungsplanverordnung). support programmes. Such programmes enable
The amendment makes provision to free up the Internet access with transmission speeds of at least
range between 790 and 862 MHz for broadband 1 Mbit/s to be rolled out in households that do not yet
mobile applications. It requires that the frequency have such broadband access.
spectrum be used primarily to provide access to
areas that are currently without broadband. It is also critical to lay a good foundation now for
3 Provided that the Bundesrat (federal council) rolling out high-speed networks. For at least 60 per
approves the ordinance before the summer cent of the population, this foundation will be laid in
break, the Federal Network Agency will be able to metropolitan areas as a result of competition.
proceed with a frequency allocation plan in 2009 However, there are also areas where modest govern-
and start allocating frequencies. The digital divi- ment subsidies could be used to promote preparations
dend could thus be used by as soon as early 2010, for broadband rollout.
at least in some regions, to ensure coverage with
capable broadband. Every possible effort should be made to stimulate
growth by granting financial concessions to businesses
The Federal Government is therefore in step with involved in broadband rollout.
other European countries that have already decided
to free up the frequency range from 790 to 862 MHz The support available to foster broadband is
for wireless transmission. Plans have been drafted in designed in a manner which does not impede compe-
Sweden, Finland, France and Switzerland. tition, avoids free-rider effects and stimulates additio-
nal investment.
If all parties involved take joint decisive action, it
may even be possible to combine low and high fre- 3 How can we promote access to high-speed
quency ranges during the next frequency allocation. broadband by 2010, especially in areas
This would increase the likelihood that resources neglected by the market?
from the digital dividend with favourable propagation
properties would actually be used to fill gaps in Local authorities can avail of various support pro-
broadband coverage. grammes provided by the Länder and the govern-
ment. A total of over 150 million euros can be accessed
through these programmes (the government share
for the ”joint task for the Improvement of Agri-
cultural Structures and Coastal Protection“, GAK,
amounts to 30 million euros by 2010).
All Länder excluding the city states are to apply
the broadband aid as part of the GAK. In areas assisted
by the GRW (“Joint Task for the Improvement of
Regional Economic Structures“), all broadband
investments made by industry can be financed with
the GRW funds under the existing provisions. In future,
GRW assisted areas will also receive increased funds
from the GRW as part of infrastructure development.16 Four-pillar strategy
GAK funds can be used to fund rural communities Measure 7: Improved conditions of funding in
in Germany that are either without broadband or the Joint Tasks
have broadband speeds of less than 1Mbit/s. The maxi- 3 The GAK and GRW Joint Tasks are already
mum government subsidy per project is 200,000 making funds available to accelerate the rollout
euros. At present, up to 60 per cent of the profit gap is of broadband with a bandwidth of at least 1
being subsidised. This gap is defined as the difference Mbit/s in areas currently without services.
between the investment costs and the profitability 3 The broadband initiative already launched in
threshold for supplying rural areas with broadband 2008 by the Federal Ministry of Food, Agricul-
services comparable to those in metropolitan areas. ture and Consumer Protection (BMELV) as part of
The decision to select a particular service supplier the GAK is soon to be enhanced: in future, up to
must not be biased towards a particular technology. 90 per cent of the ”profit gap“ will be eligible for
In general, the operator selected must guarantee all funding.
suppliers equal, non-discriminatory access to elec- 3 It is expected that as of March 2009, local
tronic communication at the wholesale level on its authorities in the GRW assisted area will receive
network. support in providing capable broadband access
(at least 2 Mbit/s) at affordable prices. The support
will fall under the heading of business-related
infrastructure. Up to 90 per cent of the profit gap
will be eligible for subsidies. In addition, up to
100,000 euros may be granted to local authorities
in receipt of planning and consulting services
from third parties. GRW funds for financing
broadband access will not be tied to particular
projects. The Federal Government assumes that
by 2013, approximately 60 million euros of GRW
funds will be spent on developing broadband
access.17
3 What support can we provide to local authori- 3 How can we further incentivise businesses to
ties that wish to use minimum funding to cre- invest in broadband development?
ate a basis for rolling out high-performance
networks (where the market does not provide Small and medium-sized telecommunications com-
this basis)? panies, in particular, can borrow funds at terms that
are in line with market conditions and with adequate
High-speed networks must be established now – risk-pricing through Germany’s state-owned develop-
this is vital. Government funding is to be made avail- ment bank’s (KfW) corporate financing programme
able for this purpose if a financial stimulus is required. for 2009.
Measure 8: Additional finance for the expan- The European Investment Bank (EIB) also pro-
sion of infrastructure vides loans to the value of half the project size for
3 According to the German law on investing in broadband projects. These loans particularly attrac-
the future (ZuInvPG), the Länder can allocate tive thanks to the long-term repayment periods of
funds to their local authorities in 2009 and 2010 typically up to 15 years and interest rates that are
for the purpose of developing broadband infra- more favourable than normal borrowing rates.
structure. These funds can subsequently be made Larger projects, worth in the region of 100 million
available to companies that wish to expand or euros, are handled directly by the EIB, while compa-
operate broadband networks. Several Länder nies can apply to the numerous German EIB
have already signalled their intention to invest Correspondent Banks for smaller projects.
part of the additional funds received under the
Government’s second economic stimulus pack- Businesses investing in broadband include large
age in developing broadband infrastructure. firms and small and medium-sized companies. It is
3 The installation of conduits is specified as a therefore necessary to design financial instruments
new object eligible for funding in the German tailored to meet different requirements. In any event,
joint tasks GAK and GRW (limited to assisted the existing and modified federal and state loan guar-
regions). antee scheme is generally available to companies in
the telecommunications sector to prevent economi-
The Federal Government plans to launch an initiative cally desirable broadband projects from failing due
in spring 2010 to encourage innovative projects by to a lack of suitable finance. With these programmes,
promoting pilot schemes. This initiative will support the Länder or the Federal Government and Länder
local authorities that have developed exceptionally together assume up to 90 per cent of the risk of
innovative solutions. It is hoped that these “broad- default for project financing.
band beacon projects“ will encourage businesses to
pursue best-practice solutions.18 Four-pillar strategy
4.4 Regulation geared to growth and the requirement outlined in section 21, paragraph 1,
innovation item 4 of the TKG, aims to promote competition in
infrastructure by considering the aim of incentivising
Customers have greatly benefited from the deregula- efficient investment in facilities, within the context of
tion of the telecommunications market and the intro- regulation decisions.
duction of sector-specific regulation. The prices of
telecommunication services have dropped sharply, Where the Federal Network Agency imposes
while the quality of available services has improved specific access obligations based on the specified
considerably. These services are being offered by criteria, in addition to the regulatory aim outlined in
numerous companies operating regionally and section 2, paragraph 2, item 3 of the TKG (to encourage
nationally. efficient investment in infrastructure and promote
innovation), it must also take into account the service-
The experiences and successes of the last ten specific risks of equity capital employed (section 31,
years have taught us that innovation and increased paragraph 4, item 3 of the TKG) within the context of
efficiency can ultimately only be achieved through rates regulation. In this regard, it can, for example,
efficient competitive processes. These competitive make provision for particular risks by applying pre-
processes, which are supported by sector-specific miums when setting interconnection rates.
regulation, not only deliver cost and price efficiencies
but also generate essential dynamic pressure, i. e. Furthermore, the ”consistency requirement“ spec-
extensive investment and innovation within the ified in section 27, paragraph 2, of the TKG addresses
economy. the aim of giving companies planning certainty with
regard to rates regulation. Through a consistent,
Regulation that is pro-growth and pro-innovation unambiguous and coherent decision-making pro-
can support the rollout of ubiquitous high-speed cess, the Federal Network Agency must ensure that
broadband access and the development of high-per- the rates it sets are coordinated to prevent any distor-
formance networks. It is critical that companies are tion of competition caused by price/cost gaps, for
offered adequate incentives to invest in expanding example.
and developing fixed and mobile telecommunications
networks. If regulation can expedite this process, the In addition, the provision on regulating new
required conceptual framework must be formulated markets, added to the Telecommunications Act in
without delay. 2007, (section 9a), specifically addresses the objective
of creating incentives for investment and promoting
3 Based on the existing regulatory framework, innovation. This amendment was made in the interests
what measures are possible to ensure that of promoting investment in broadband networks.
companies have planning certainty? The purpose of the provision is to ensure that new
markets are tapped and risk-bearing investments
Two important objectives of the Telecommunications given due consideration in regulation decisions. The
Act (TKG) are to promote efficient investment in specification in section 9a, paragraph 2, of the Act
modern infrastructure and support innovation. provides the legal requirements for new markets to
be regulated in line with directive law. In exceptional
Section 21, paragraph 1, item 3 of the TKG, for cases, ex-ante regulation for specific sectors (network
example, explicitly states that ”the initial investment access, rate approval obligations) can be disregarded
by the facility owner, bearing in mind the risks in- entirely provided this does not distort competition.
volved in making the investment“ must be taken into
account when determining whether and which
access obligations should be imposed. Furthermore,19
Measure 9: Improved planning certainty for 3 Is there any remaining scope within the existing
companies regulatory framework to include regulatory
The existing regulatory framework fundamentally models geared to growth and innovation?
offers adequate flexibility for planned invest-
ments and development of new broadband infra- The existing regulatory framework already covers all
structure. However, there have been calls for possible regulatory options that favour growth and
greater planning certainty. The Federal innovation. There are calls from market players to the
Government is therefore considering whether it Federal Network Agency to provide clarification on
is feasible in the short term to extend the existing the question of a long-term regulatory perspective so
validity period for market analyses from two to that we can eliminate as much uncertainty as possible
three years. about future regulation measures. The Federal
Government supports this request, but points out that
specific, single-case decisions cannot be made in
advance based on these position papers. Such de-
cisions can only ever be made on foot of individual
consideration of each case by the Federal Network
Agency.20 Four-pillar strategy
Measure 10: Define the main features of regu- 3 What changes are necessary to European
lation geared to growth and innovation requirements to provide a supportive climate
The Federal Network Agency will compile key for investment in next-generation networks?
issues on general regulatory conditions for the
further expansion of modern telecommunications To date, the proposals on market regulation drafted
networks and the creation of a capable broad- by the European Commission (as part of its examination
band infrastructure. The agency will make these of the European regulatory framework for telecom-
issues available for public discussion. In the munications), have not yet adequately tackled the
Federal Government’s view, they must address need for a telecommunication policy designed to
the following points: foster growth and innovation. Nor do the proposals
3 Economic and planning certainty (e. g. regula- adequately address the impact of the crisis in the
tion periods) with regard to the typical planning financial market.
horizon for these investments;
3 An appropriate rate of return on equity if reg- These shortcomings in the current EU package
ulated rates apply to access services and facilities must be resolved. By amending the European re-
to allow for specific risks if necessary; gulatory framework for telecommunications, the
3 Appropriate, competitive sharing of infra- correct foundations must be laid for the imminent
structure that may allow for the reduction of development and expansion of high-speed networks.
relevant risks; From an investor’s point of view, two obstacles in
3 Transparency requirement regarding the particular prevent rapid expansion of the infra-
planned reconstruction of the network by the structure. These are: first, the high risks associated with
market players. investments in infrastructure; second, the lack of
planning certainty because of possible discontinuities
If agreement is sought between individual market in regulation policy methods.
players on developing infrastructure and the ideas
discussed take on a more definite form, the Federal In discussing amendments to the regulatory
Network Agency and Federal Cartel Office will clarify framework and in formulating recommendations by
the fundamental regulatory and competition law the Commission, the Federal Government will seek to
issues with the parties involved as soon as the appro- prioritize methods of regulation that are stimulus-
priate documents have been submitted. On the basis oriented, promote investment and have a neutral
of these clarifications, a general summary of ideas effect on competition, while ensuring that companies
and positions must then be drafted, which can be are not overburdened.
used to clear a path for future cooperation between
other parties.
The Federal Network Agency will also forge
ahead with drafting basic principles for consistent
rates regulation, with a view also to encouraging
efficient infrastructure investment. These principles
will be discussed with the stakeholders.21 Measure 11: Requirements related to incentives possible to generate enormous sums that must be and investment stimulus in the EU regulatory made available in the coming years for modern- framework ising telecommunications networks. In the At a European level, the Federal Government is interests of competition, the Federal Government seeking clarity within the EU telecommunications will monitor the incentive mechanisms to ensure regulatory framework in order to achieve speedy that network access is available to all and that the and reliable modernisation of networks. principle of non-discrimination is preserved. The 3 The additions sought to the framework direc- regulations must not be allowed to distort market tive should offset the investment risk by enabling competition. innovative and intelligent cooperation mecha- 3 The Federal Government is also advocating nisms that will adequately spread the investment long-term planning certainty and consistent risk among the network operators and between regulatory policy. Specifications made by the the network operators and businesses requiring regulatory bodies must be guaranteed to be valid network access. The Federal Government will for more than three years and thus endure longer campaign at European level and among Member than the validity of a market analysis, if necessary. States for this type of incentive mechanism and A stable regulatory climate is crucial for the the creation of an investment-friendly environ- necessary investment in next-generation net- ment. Once these factors are in place, it will be works.
22
5
Information and transparency
Notwithstanding the range of information policy A number of the implementation issues connected to
measures implemented by the associations, Länder the government’s broadband strategy can only be
and the Federal Government, lack of knowledge dealt with through efficient cooperation with the
about possible ways of rolling out broadband often Länder. This cooperation must be based on a solid
remains a problem on the ground. Ultimately, the foundation.
local authorities and the public must also be attracted
to new broadband measures. There is also a general Measure 14: Set up a Government-Federal
need for a targeted public relations campaign to States taskforce
highlight the importance of infrastructural projects. The Federal Ministry of Economics and Technol-
ogy (BMWi) regularly holds meetings with re-
Measure 12: Active and participatory public presentatives from the Länder (federal states)
relations working group on Telecommunication, IT and
The Federal Ministry of Economics and Technol- Post to discuss current issues in the area of tele-
ogy (BMWi) will further develop its broadband communications and regulatory policy. This
portal www.zukunft-breitband.de. Apart from panel should be drawn upon to form a taskforce
the Broadband Atlas and best-practice examples, comprised of representatives from the Federal
this portal also currently includes checklists for government and the Länder: the taskforce would
local authorities and information on financial discuss and develop solutions to any of the issues
support. A database is being compiled: local raised in this strategy document that require
authorities will be able to upload broadband- resolution through collaboration. Experts from
relevant data to this database, thus reducing the relevant government and Länder depart-
market entry costs for potential suppliers. ments would called upon to participate in this
process.
In addition to the individual broadband centres within
the Länder, there is a need to set up a one-stop shop at The Broadband Strategy is a complex schedule of
national level, which would handle all important measures that must be implemented step by step.
issues related to broadband rollout for all Länder. Its Measures implemented must be carefully documen-
role would cover issues of standardisation, consulting, ted to ensure the strategy is sustainable.
cooperating on initiatives with other countries, test-
ing and evaluating various models designed to create Measure 15: Draft an annual monitoring report
high-performance networks or support the local The Federal Government is to draft an annual
authority bodies managing the rollout of broadband. monitoring report in order to document in detail
measures already implemented, identify further
Measure 13: Set up a broadband centre of steps and present new action requirements. The
excellence first report will be made available to the public by
The concept of centralising administrative con- the government in Spring 2010.
tacts already has a proven track record in the
Länder. In the Federal Government’s view, there Over the past few years, the Länder have been extre-
is also a need for a ”Broadband Centre of mely proactive in closing existing gaps in broadband
Excellence“ at a national level. This centre would coverage. The Federal Government welcomes their
act as a centre for advice and information, and commitment. It is now time to intensify these measures
make proposals on the actual implementation of and further expand the rollout of high-speed net-
measures. As part of its broadband strategy, the works, so we can move closer to achieving our
Federal Government is to set up or commission a targets.
one-stop shop (”Broadband Centre of
Excellence“) in the near future, with responsibility
for these operational tasks.23 6 Outlook With data traffic on the Internet growing by more Networks for the Next Generation“, the Federal than 50 per cent annually, powerful access technol- Government is helping German enterprises and ogies are vital. New technologies and trends on the research institutes to develop innovative solutions in Internet, such as peer-to-peer technologies or the line with its objectives. The support initiative is dramatic increase in Internet users through the designed to help companies tap into the enormous ”Internet of Things“ will place higher demands on the market potential of Internet-based technologies and capacity of current access networks. To address this become global leaders among international competi- challenge, the Federal Government is supporting the tors, thus driving innovation and growth in Germany. ”100GET“ innovation alliance and ”Broadband Access Networks for the Next Generation“ as part of the This Broadband Strategy (aims and proposed ”Optical Technologies“ and ”ICT 2020” support measures) focuses exclusively on enhancing the programmes. The 100GET innovation alliance is availability and quality of broadband infrastructure developing technologies for a high-speed, reliable in Germany. Questions concerning the development and secure Internet of the future and includes all and use of the Internet that fall outside the scope of network operators active in Germany. By promoting this strategy are addressed within the Federal the research and development of ”Broadband Access Government’s ongoing ICT policy and the IT Summit.
24 Appendix
Appendix: technologies in broadcasting frequency ranges. The
frequency spectrum currently used for analogue
Technologies and opportunities
broadcasting in the frequency range 470 – 862 MHz is
particularly suited to ensuring coverage over large
Current technologies can be used to expand the
areas. Its physical wave propagation capabilities pro-
broadband network in various ways – all of them will
vide satisfactory building penetration and only a
enhance the network’s potential over the coming
small number of transmitter masts is required. The
years, through a combination of technological ad-
digital dividend yielded as a result of the introduction
vances, increased capacity and the adoption of new
of digital TV enables faster and more efficient basic
developments.
access to broadband services in sparsely populated
regions. It also creates a base for the creation of sus-
3 Satellite Internet is primarily an option for
tainable, high-capacity infrastructure. Provided that
locations that do not have access to terrestrial broad-
the necessary policy framework is in place within the
band, in particular those outside interconnected
projected timeframe, it is estimated that we will be
settlement areas. However, its benefits – widespread,
able to capitalise on the digital dividend in the fre-
immediate access – are compromised by certain tech-
quency range 790 to 862 MHz as of 2011 and, in some
nological restrictions in terms of capacity and by high
regions, even earlier.
monthly charges. In particular, the upload rate via
satellite Internet is very low and, because it takes a
3 Point-to-point radio solutions can ensure rapid
relatively long time for the radio signals to be sent
connection of local networks. With this technology,
and received (latency period), this broadband tech-
broadband services are usually provided as hybrid
nology has limited suitability for realtime-critical
solutions combining point-to-point radio and other
applications. Nevertheless, download rates of 1–2
wireless solutions (WLAN etc.) or wireline local area
Mb/s and higher ensure access to all core Internet
networks. However, point-to-point also allows indi-
services (excluding online gaming). Existing capacity
vidual companies to connect to the network directly.
restrictions, which currently enable simultaneous
Setting up point-to-point radio links is a relatively
usage by just 10,000 users nationwide, are expected
inexpensive solution; it offers high data transmission
to increase significantly as of 2010, once the planned
rates and can be implemented quickly.
use of ”spot beam“ technology to provide satellite
broadband services has been implemented.
3 Mobile network operators are further upgrading
their networks with HSPA for the maximum trans-
3 WLAN-based wireless access has proven to be a
mission rates that can currently be achieved, i. e.
successful and cost-effective temporary alternative in
7.2 Mb/s (download) and 1.45 Mb/s (upload). By the
many local areas, particularly in rural locations,
end of 2007, Germany already had 8.7 million UMTS
where no other form of broadband access is available.
users, a figure which is on the increase. The next
WLAN is well suited to transmission over short dis-
generation of mobile wireless broadband technology
tances. It is mainly used within apartments or building
– Long Term Evolution (LTE) – is set to emerge in the
complexes. Antennae are mounted to create small
coming years. LTE will be capable of providing high-
wireless networks (hotspots) with a range of approxi-
speed Internet services with high, doubledigit data
mately 100 metres. The maximum bandwidth avail-
transmission rates. At present, mobile wireless broad-
able (up to 54 Mb/s) within a WLAN cell must be
band networks mainly service urban regions and play
shared by all users, which reduces the amount of
only a minor role in ensuring widespread coverage.
bandwidth available to each user.
However, we can expect this situation to improve. In
future, the frequency bands around 900 MHz, which
3 The transition to mobile radio technologies such
are currently used by GSM networks, are to be freed
as LTE or WiMAX is imminent: the better the underly-
up to all forms of wireless network access, regardless
ing general conditions, the faster these technologies
of the technology employed. In addition to upgrading
will be developed. Pilot projects are currently under-
wireless interfaces for high-speed Internet access,
way to test the technical suitability of mobile radio25
mobile network operators will also focus on investing deliver the highest performance among broadband
in fibre-optic connections for mobile wireless base infrastructure types. These networks are not subject
stations over the coming years. High synergies may to capacity restrictions in the foreseeable future, and
be obtained by simultaneously expanding mobile are capable of offering users high-speed Internet
wireless networks and fixed-line networks. access with transmission rates extending into the
gigabit range (≥ 1000 Mb/s). Current business models
3 In rural areas, concerted efforts are being made for FTTB projects require a high population density in
to replace copper links with fibre-optic connections the broadband rollout zones and long-term invest-
to overcome the coverage problems associated with ment over 20 to 30 years.
DSL and ensure access to broadband connections
with speeds of at least 1 Mb/s. This upgrading of
DSL by Deutsche Telekom and their competitors
(a commercially driven project) will extend to many
local network areas in future.
3 German TV cable network operators are up-
grading their networks for high-speed Internet
access. By mid-2009, it is planned that 24 million
households will be able to connect to broadband
Internet via their cable network. Capable Internet
access via cable TV would thus be available to 60 % of
all households in Germany. The introduction of the
new IP standard for cable networks (DOCSIS 3.0),
which is scheduled for 2009/2010, will enable broad-
band connections at speeds of over 100 Mb/s for all
households. TV cable networks operate in large and
medium-sized towns and cities, but also in many
small and miniscule communities.
3 Deutsche Telekom is currently expanding its
local networks in many urban areas for high-speed
VDSL access. Deutsche Telekom is also forming part-
nerships with other network operators to extend
these networks to other towns and cities. With VDSL
technology, networks of fibre-optic cables are
brought closer to users than conventional DSL. As a
result, data can be transmitted faster along shorter
distances of copper cabling to achieve bit rates of up
to 50 Mb/s. Experts predict that VDSL technology will
enable bandwidths in the order of 100–200 Mb/s.
3 In some local areas, mainly in large cities, regional
network operators like NetCologne, M-Net or
Hansenet have begun implementing fibre-optic net-
works with lines connecting directly to individual
buildings (FTTB) or individual apartments (FTTH).
Fibre-optic networks are currently considered toYou can also read
